June 19 (Bloomberg) -- Zinc rose to the highest in almost 16 months in London on concern that production will fail to keep up with demand amid supply curbs and shrinking inventories.
Stockpiles tracked by the London Metal Exchange have dropped 28 percent this year to the lowest since December 2010. Tokyo-based Toho Zinc Co. said last month it will cut output of semi-processed ore at its Australian mines. Supply of the refined metal trailed demand in the first four months of 2014, the International Lead and Zinc Study Group said this week.
“We’ve had commodity funds starting to take interest in the metal,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “People are looking at above-ground inventories and they’re looking at exchange inventories and concluding that we could be seeing significantly higher prices.”
Zinc for delivery in three months climbed 0.8 percent to settle at $2,153 a metric ton at 5:50 p.m. on the LME, and touched $2,161, the highest since Feb. 20, 2013. The commodity gained for a fifth session, the longest rally since Feb. 28.
Prices also rose after the Federal Reserve said yesterday it expects to keep interest rates close to zero for a “considerable time.” In China, the world’s largest consumer of industrial metals, Premier Li Keqiang pledged in a London speech to meet the nation’s target for economic expansion.
“The view from Fed, and positive statements from Li Keqiang in London, have steadied markets,” RBC Capital Markets LLC said in a note.
Stocks of zinc contracted for a ninth session, to 674,375 tons, according to daily LME data. Inventories have climbed only once since April 2.
Copper for delivery in three months added 0.2 percent to $6,725 a ton ($3.05 a pound) on the LME. In New York, copper futures for delivery in September rose 0.5 percent to $3.0755 a pound on the Comex.
Aluminum and lead rose on the LME. Nickel declined while tin was unchanged.
--With assistance from Alfred Cang in Shanghai.